With our working lives completed and the children independent (mostly), a fantastic new opportunity has arrived. The chance to find somewhere to live that doesn’t need to be located within convenient commuting distance of work or schools.
During our working lives we often find ourselves making head or heart choices about where to call home, our head nearly always gets the casting vote. Retirement finally gives our heart the opportunity to have some serious voting leverage. At last a sweeter climate and a beautiful vista finally trumps a short walk to the nearest train station.
In fact, according to The Telegraph almost half of those Britons with an income of more than £60,000 are apparently planning to retire outside of the UK, either permanently, or at least for a number of years.
The heart’s choice of sun filled blue skies and turquoise ocean views needn’t give the head great cause for concern. There’s some very good news for the heads that are reading this article as well… There are some very tangible advantages with retirement abroad that with shrewd planning should lead to both head and heart feeling a deep sense of mutual satisfaction in their “joint decision” to retire abroad.
How to really make your retirement abroad very advantageous:
1: Enjoy the Benefits of the Lower Cost of Living
In the most popular retirement destinations especially for Britons, the cost of living is often lower than in the UK.
Yes! Even when the pound is having the life squeezed out of it.
With good planning, it’s possible to live well on much less in some of our favourite retirement destinations, such as Spain or Portugal. That must sound better than being huddled up with a blanket in chilly UK.
By retiring overseas, it can be like getting a pay rise as you cross the border into your new country of residence!
Of course, this depends greatly on the country you choose to retire to: if Monaco is your choice retirement destination, that might not be the case.
If you retire to Italy or Germany, then the difference in the cost of living is insignificant, more swings and roundabouts that any strong gains or losses either way.
However, in Malta, Cyprus, Spain, Portugal and many other countries with absolutely wonderful climates and high standards of living, you will often be pleasantly surprised with the overall reduction in the cost of living and consequently a very welcome increase in your personal purchasing power.
For example, with some careful planning a move to magnificent Portugal should see you on average 32% better off than someone with a similar lifestyle back in the UK, with sunshine thrown in at no extra charge whatsoever.
Tip! If you want to do some country cost of living comparisons, check Numbeo – it’s a brilliant site to use for number crunching to get a feel for your monthly living costs overseas.
2: Choose a Healthier Climate for a Healthier You
We all feel happier on sunny days, we’d never choose holidays that put ourselves through the pain of travelling through busy airports and wedging ourselves into cramped uncomfortable aircraft seats if the reward of warmth and sunshine wasn’t waiting for us.
Retiring overseas gives us all chance for some long term climate enhancement. Don’t just pick a location that you’ve only been to at the height of the holiday season. Do some climatic research and choose a retirement location based around your ideal overall climate and make sure it’s a good fit for your lifestyle and favourite pursuits.
Unlike UK’s temperate climate with winters that sit around 8C and summers that can average 18C, continental locations can experience far bigger variations in temperature extremes through the year. Coastal areas tend to have more moderate climates while inland continental areas can experience freezing winters and extreme heat in the summer.
If the place you love most does have a few months of extreme cold or heat, don’t rule it out, instead plan around it. We all need to take time to visit family and friends back at home; when you can fry an egg on the patio – what a perfect time to catch up with everyone back in old Blighty. Invite those friends and family to come and see you when they’ve have enough of UK’s temperate climate and you’ll never be short of somewhere to stay in the UK.
One secret of retiring overseas is that you choose the best climate to live in for the majority of the time. Take a few weeks away visiting family during those times when it’s too hot.
3:Plan Your Ideal Retirement Lifestyle
Regardless of where you live, retirement always heralds the start of a very different lifestyle. Whether you plan for that new lifestyle or not, your life will change dramatically in retirement, therefore, it’s always much better to make that plan.
It may well be the first time in your life where you really can put yourself first. When was the last time that you really had the freedom to plan your life around your passions, hobbies and interests?
Whatever it is you are dreaming about doing, retirement abroad could make it a whole lot more accessible and affordable. Whether it’s scuba-diving, gardening, playing golf, sailing, cooking or dancing salsa on the beach, a well planned retirement abroad can give you the perfect opportunity to do it all.
Invest some time investigating and comparing countries, choose a location that will contribute best to your ideal lifestyle. Do what you have always wanted to and enjoy your new found freedom of retirement.
A well planned retirement abroad will give you greater freedom, a healthier lifestyle and generally a little more money to spend on the things and people that you love most.
4: Optimise the Financial Benefits of Retiring Abroad
Choosing to retire abroad can enable you to have greater individual control over your personal wealth. By becoming non-resident for tax purposes in your home country, you will open up a good deal of potential financial and pension benefits that you can take advantage of.
Every country benefits from having more wealthy people in their population, many countries are now actively competing to attract wealthy expats. Independent expatriate retirees can add a very valuable financial boost to any nation’s economy. In order to attract those much sought after retirees, some countries offer incentives and special deals to expats who want to come and live there. Most of these incentives, as you can imagine, are related to lower taxation on income, capital gains, wealth, inheritance, etc.
As an example, if you retire to Cyprus, there is an optional special rate of 5% on your UK pension income that you will pay in Cyprus as your income tax, which is extremely low. In Northern Cyprus, tax exemptions are so large that they can enable expat retirees to live practically tax free.
Living abroad often enables you to manage your wealth more efficiently by paying lower taxes and using a wider range of opportunities for pension investment and income; plus you can often pass on your estate to your family with far lower taxation demands than in your home country.
Depending on your country of choice by retiring abroad you might be able to:
- Optimise your income tax: some countries don’t tax expat retirees at all or levy a very low tax on pensions. For example, using pension freedom a British retiree can take their entire pension out in one go or over a number of years and go to live in Portugal under non-habitual residence regime tax-free for 10 years.
- Enjoy tax-free dividend income and/or tax free capital gains: for instance, if you move to Malta and become a tax resident there, you will be exempt from tax on foreign source capital gains, dividend and interest income.
- Legally mitigate UK Inheritance Tax for your family: by moving overseas and seeking professional financial advice you could protect your assets from inheritance tax by moving them into tax efficient financial structures.
- Make the most out of your capital: by becoming an expat you have a chance to invest offshore and make your capital work to outpace inflation and beat the unattractive interest rates that banks offer. Offshore investments are flexible and portable. They can also give you greater control in managing taxation liability when the time comes to cash in your investment.
5: Enjoy The Benefits of Advanced Healthcare Systems
Choosing the right country when you retire abroad can mean that you’ll be able to access some of the most advanced healthcare in the world.
Whether you live in Cyprus, Andorra, France or Chile, the healthcare services available for expats won’t let you down, provided, of course, you have suitable medical cover.
International health and medical cover may seem costly, however, by using your expat financial advantage to offset other living costs you could find that private health insurance is very affordable.
Who wouldn’t want to trade expensive winter heating and energy bills for high quality private healthcare in retirement?
These five benefits of retirement abroad are all about planning for a much happier and rewarding lifestyle following our working lives .
Whether we speak about your health and lifestyle, financial practicalities or looking after your family, – all of these vital elements can be affected in a very positive way should you choose to spend your retirement living in a new country.